UTILITY COMMITTEE
The Utility Committee meeting was held on January 28, 2008 at 5:05 p.m. with Chairman Ruane presiding. Members present were Mr. Leary, Mr. McGiffin, and Mr. Cregar. Mr. Snaman was absent. Mayor Carey was also present.
AGENDA ADDITIONS/DELETIONS
Mr. McGiffin moved for approval of the agenda, seconded by Mr. Leary and unanimously carried.
2030 Energy Plan Committee - RFP Process
As discussed during their meeting of January 14, 2008, Mr. Lunt, Public Utilities Director, reminded members that the 2030 Energy Plan Committee was developed to review and analyze the current status of the existing generation assets, projected load growth, and current procurement practices for purchasing capacity and energy for the ratepayers served by the City of Dover Public Utilities. He advised members that through this process, it became apparent that the City’s current generation assets are not large enough to serve the electric system demand. The City is currently short approximately 15 mw of capacity, which is projected to grow to between 62 mw to 153 mw, depending upon growth, and assuming that all current generation assets continue to operate. Due to this shortfall, the City’s Public Utilities is required to purchase capacity from the PJM marketplace in addition to the energy requirements. In order to properly evaluate the options available, Mr. Lunt stated that the 2030 Energy Plan Committee recommended contacting the energy and generation market to gather further information from potential generation development parties. Because of the complexity of this process, and in order to entertain a broad scope of potential services, the 2030 Energy Plan Committee recommended that a Request for Proposal Purchasing and Process Policy be adopted for this process as the current Purchasing Policy does not provide the flexibility required for this complex need. Staff provided members with a draft of the proposed Policy, which was designed to provide access to specialized market expertise in a fair, competitive, transparent process to facilitate an efficient evaluation of the potential proposers.
Mr. Lunt provided a presentation and reviewed the draft Request for Proposal Policy and Process (Attachment #1).
Staff recommended adoption of the Request for Proposal Policy and Process for the evaluation of capacity and energy products available to the City of Dover Public Utilities and to designate PACE Global as the Proposal Administrator for this process.
With regards to the creation of a Steering Committee, Mr. Leary suggested that the Chairman of the Utility Committee, Mr. Ruane, serve as a member.
Mr. Ruane suggested that the motion clarify that staff’s recommendation is to designate PACE Global as the Proposal Administrator for Phase I, which is the Request for Qualifications, of this process.
Mr. Cregar moved to recommend approval of staff’s recommendation for adoption of the Request for Proposal Policy and Process for the evaluation of capacity and energy products available to the City of Dover Public Utilities and to designate PACE Global as the Proposal Administrator for Phase I, which is the Request for Qualifications, of this process. The motion was seconded by Mr. Leary and unanimously carried.
Mr. Frank Tenusak, 880 Schoolhouse Lane, suggested that, due to the complexity of this issue and the interest of the public, the City should place an article in a local newspaper to inform the residents of the action being taken. In response to several questions, Mr. DePrima offered to meet with Mr. Tenusak to further explain the process and details regarding this matter. Mr. Ruane noted that this matter will be forwarded to City Council for consideration during their Regular Meeting of February 11, 2008.
Proposed Ordinance - Chapter 110 - Utilities, Article II - Electric Service, Section 110-32 - Pole Attachment Fee
Members were provided a draft ordinance amending Chapter 110 - Utilities, Article II - Electric Service, Section 110-32 - Pole Attachment Fee, as well as the Pole Attachment Fee Study performed by Thomas Unke of Virchow Krause & Company dated June 30, 2005. Mr. Lunt, Public Utilities Director, advised members that the ordinance was developed by Jim Baller and Sean Stokes of the Baller, Herbst Law Group, P.C., who have vast experience with pole attachments. They have co-authored the APPA Pole Attachment Work Book with Thomas Unke, and Charles Forster and have drafted similar ordinances for other utilities in numerous states.
Mr. Lunt explained that the proposed ordinance will enable the City to charge rental fees to entities which attach to the City’s electric distribution and transmission poles, ducts, or conduits. These fees will compensate the City for the carrying costs associated with constructing, operating, and maintaining the poles, ducts, and conduits. The fees can be considered the cost of “renting” a portion of the pole, ducts, or conduits. Pole attachment fees are meant to recover pole, duct, or conduit related costs incurred by the City. He stated that the actual charge of $8.17 for the fee came from the 2005 Pole Attachment Fee Study and is based on the FCC Based Method of calculating pole attachment fees. It was decided to use this methodology as this is a Federal standard that investor owned utilities are mandated to follow. The implementation of this fee is estimated to generate approximately $81,700 annually (estimated 10,000 poles x $8.17). Mr. Lunt advised members that the Electric Department will be required to pay Verizon for the poles that the Department attaches to within the service area. At this time, it is unknown exactly how many poles are owned by Verizon; therefore, this expense cannot be estimated.
Mr. Lunt indicated that staff reviewed the ordinance with William Pepper, Deputy City Solicitor, and that the draft ordinance and attachments were sent to all known entities attaching to our poles, which included Comcast, Verizon, and Bayhealth Medical Center, so that they could review and respond to it. He advised members that staff has discussed the content of the ordinance with Comcast numerous times and negotiated language changes as appropriate. While they have minor issues with certain clauses, for the most part they have agreed with the intent of the ordinance. Staff has also met with Verizon several times and is in the process of negotiating a Joint Use Agreement with them. The Joint Use Agreement is recognized within the ordinance and is applicable for parties that also own poles within the Dover area. It is anticipated that this Agreement will be forthcoming.
Staff recommended approval of the Pole Attachment Fee Ordinance amending Chapter 110 - Utilities, Article II - Electric Service, Section 110-32 - Pole Attachment Fee.
Responding to Mr. Ruane, Mr. Lunt stated that the City is recommending use of the FCC Guidelines, which were developed for industrial utilities to follow FERC accounting. He noted that the City does not use FERC accounting methods for expenses towards the utilities, which is not unusual for municipalities, nor is the City mandated to follow the FCC Guideline, explaining that municipal utilities are exempted from that mandatory requirement of industrial utilities. He explained the difficulty with the City utilizing the FCC Guidelines. It was his opinion that the actual charge, in the amount of $8.17, would be reviewed in five (5) years. Mr. DePrima indicated that these fees will be included in the Revenue Manual.
Since the proposed fee came from the 2005 Pole Attachment Fee Study, Mr. Ruane noted that three (3) years has since lapsed and suggested consideration of this in setting the year for its review.
Mr. McGiffin moved to recommend approval of staff’s recommendation for adoption of the Pole Attachment Fee Ordinance amending Chapter 110 - Utilities, Article II - Electric Service, Section 110-32 - Pole Attachment Fee (Attachment #2). The motion was seconded by Mr. Leary and unanimously carried.
Presentation - Contact Chamber Effectiveness
Members were provided a presentation on Water Quality Improvements - Contact Chamber Effectiveness, which was reviewed by Mrs. Duca, Assistant City Engineer. She reminded members that the 2006 Water Quality Evaluation recommended the installation of contact chambers at deep well sites and that these chambers were identified as a necessary first step in addressing brown water issues. Mrs. Duca advised members that two (2) of the three (3) chambers that have been installed are online. In order to verify the effectiveness of the contact chamber, she stated that data was collected before and after the chamber was brought online. She reported that the sample data that was collected confirms that the expected results were achieved.
Mrs. Duca indicated that it is anticipated that most of the chambers will be installed and online during FY2008.
Members commended Mrs. Duca and other staff members for their commitment and work on this project.
Mr. Leary moved to recommend acceptance of the Report on the Water Quality Improvements - Contact Chamber Effectiveness as presented, seconded by Mr. Cregar and unanimously carried.
Mr. McGiffin moved for adjournment, seconded by Mr. Leary and unanimously carried.
Meeting Adjourned at 5:52 P.M.
Respectfully submitted,
Eugene B. Ruane
Chairman
EBR/TM/jg
S:ClerksOfficeAgendas&MinutesCommittee-Minutes20081-28-2008 UTILITY.wpd
Attachments
Attachment #1 - Presentation - Draft Request for Proposal Policy and Process
Attachment #2 - Ordinance Amendment to Chapter 110 - Utilities, Article II - Electric Service, Section 110-32 - Pole Attachment Fee